A Dalberg study into how people in Kenya experience and use digital devices and services offers insights for stakeholders seeking to advance and deepen digital engagement for all Kenyans.

The study, conducted in partnership with Omidyar Network, validates Kenya’s position as a continental leader in access to digital infrastructure, finding that 98% of people own a SIM card, more than half use a smartphone, and 65% have access to the internet.

It also sheds new light on the degree to which Kenyans rely on and are satisfied with digital tools and services, with an overwhelming majority of people (84%) reporting that digital devices and services are making their lives better. But 22% of people still use only basic digital services like sending and receiving money on mobile phones or topping up airtime, and less than a third of Kenyans—a significant minority—have seen any boost in income as a result of using digital devices and services, suggesting that the use of digital services for business and livelihoods has considerable room for growth and deeper engagement.

In the case of a 32-year old farmer interviewed for the study, digital services have provided useful information and helped him to market produce. He uses Google on his smartphone to research crops and pesticides and can also market his fresh produce via Facebook and WhatsApp.

“Sometimes I take pictures of my produce then send them via groups. It has helped me market during Covid,” he says.

Others are less connected, like a micro consumer goods vendor who says that with access to a smartphone and learning how to use it, she would “visit Google and YouTube, and use WhatsApp and Facebook so I could be more connected.”

The study highlights the ways in which understanding people’s views of digitization can help accelerate Kenya’s digital economic goals, offering a comprehensive evidence base of how different Kenyans access and use digital services, as well as the specific support they need to increase the quality and depth of their participation in the digital economy. Dalberg also developed a framework of digital ecosystems adapted to understand people’s relationship to four interlinked components, namely, supporting ecosystems, core digital infrastructure, enabling resources, and applications and services. Findings are based on a nationally representative survey of over 2,400 people conducted in November and December 2020, and on ethnographic research.

The Covid-19 crisis provided a unique backdrop for the study—a profoundly disruptive event that prompted many Kenyans to accelerate their adoption of digital services, while the government and private sector also used the period to accelerate important digitization policies and investments, paving the way for further advancement.

Digital transformation in Kenya

In recent years Kenya has taken strides to lay the groundwork for a bold agenda where its digital economy is the foundation for creating an empowered society. It has enabled forward-leaning investment and innovation in core digital infrastructure and created a booming technology start-up ecosystem for advanced digital applications and services—supported by the guide rails of Kenya’s long-established mobile money sector and a favorable regulatory environment. It has also made progress in defining policies and frameworks for enabling resources—such as the country’s digital ID system—and investing in support ecosystems that can help people access and use digital services. The study further confirms that Kenyans are receptive to expanding and deepening their digital usage and are already benefiting from efforts to make digital services more accessible.

Dalberg’s survey found that 94% of Kenyans use mobile money, and 44% of them increased their usage during the Covid-19 pandemic (the majority motivated by a fee waiver). The sector has come a long way since 2006 when only 26.7% of Kenyans had access to formal financial services. That number had tripled by 2016 largely due to digital financial products like M-Pesa,1 which entered the market in 2007 and enabled users to store value on their mobile phones for purposes such as transfers to other users, payments for goods, and services, and conversion to and from cash. An enabling regulatory pathway allowed Kenya’s digital financial sector to thrive and develop, sparking a mobile banking revolution where Kenya emerged as a leader in financial inclusion. Today the country is considered one of the world’s FinTech and Agritech innovation hotbeds.

As Kenya continues to transform its digital economy, the hope is that various stakeholders — from government to the private sector to academia and civil society—can draw on the findings and survey datasets of Dalberg’s study to reach a clearer understanding of the different Kenyan user segments. With these insights, stakeholders can develop targeted solutions that are more effective in addressing the root causes of exclusion, and further strengthen ongoing efforts to enhance Kenyans’ participation in the digital economy.

Narrowing the digital divide and advancing digital engagement

A deeper look at the degree to which people rely on and are satisfied with digital tools and services and the overall impact on their social and economic lives indicates that Kenyans’ participation in the digital economy would further deepen if a number of critical areas detailed in the study are addressed—among them access and security.

The study confirms that among the 22% of basic users, many people face a number of key challenges that limit access to digital services with the result that 95% of this group have only basic phones, 69% have no access to the internet, 54% cannot pay for internet connection, and 69% need help to use digital services.

“Nobody wants to be left behind with these small phones. Everyone wants to know more and to be part of the digital world.” – A peri-urban seller of hardware

Unsurprisingly, most geographically, financially, and socially vulnerable Kenyans are among the group of basic users—the group which is also most at risk with a widening digital divide as the country’s digital economy advances. Data show that 85% of rural residents with lower than primary education, 45% of people with disabilities, 44% of older people, and 37% of adult farmers or homemakers use only basic digital services, if any. The study also corroborates the commonly understood gender divide in Kenya, finding that 35% of women use advanced digital services compared to 54% of men.

However, the study sheds light on some advanced digital services that are reaching several portions of “typically left-behind” segments and helping to improve lives, particularly for women. Among these are the Agritech platforms that are transforming small-scale farmers, most of whom are female farmers, into agribusinesses through digital capacity building and access to markets.

But even among the 44% of self-employed Kenyans and business owners who already use digital services to support their businesses, a surprisingly low number (15-18%) use advanced digital services for business, with as many as 71% saying that concerns about digital fraud limit their usage, and 30% reporting they have experienced it.

According to an online seller of properties and household goods, the major reason people don’t use online platforms for e-commerce is mistrust. “They don’t offer a platform where my data is safe. If I make a payment, I can never be sure that my payment can’t just disappear.” His view is echoed by a student in rural Kenya who believes she would trust spending money online more if it was with a brand she knew, “where there are mechanisms of following up and assisting clients if they get conned.”

While greater user awareness and more robust redressal mechanisms will be needed to enhance users’ protection, regulatory changes are already underway and are aimed at providing greater protection for individuals and businesses in their digital usage in Kenya, and globally.

E-commerce users also highlight the national address system as a barrier to their wider use of digital services for business purposes, pointing to the challenges experienced with deliveries due to imprecise street addresses and logistics issues. Government efforts are underway to address challenges with the national addressing system—and present a critical opportunity for advancing e-commerce, according to the study.

The study also reinforces previously held views that access to hands-on support will be vital in helping Kenyans deepen their use of some digital services. People are hopeful about the ecosystem of government Huduma (service) centers, and among existing e-commerce users, 81% have already used Huduma (service) centers for support with accessing e-governance services.

A rural farmer who visited a Huduma Centre when he lost his ID said the experience was “very timely, convenient, and professional compared to other government departments I have visited.” But access is a problem for those without Huduma centers in their neighborhood, especially for the 68% of users living in less populated urban areas.

In some cases, the study found direct evidence that government and/or private sector interventions are beginning to accelerate usage—particularly during the Covid-19 pandemic—and goes so far as to uncover which segments of Kenyan society were able or unable to accelerate their use of which digital services in order to support their lives and livelihoods during the early months of the pandemic.

An inclusive digital transformation

The next few years offer an opportunity to build on the progress of prior years and the momentum of current efforts. To do so will also require focusing on deepening Kenyans’ use of advanced digital services as well as addressing persistent challenges for people who have historically been excluded.

As Kenya enters the next stage in digital growth, solutions that account for the nuances and complexities of Kenyans’ diverse experiences and needs will be required. The challenges faced by excluded groups are neither simple nor homogeneous, and one-size-fits-all solutions will not adequately address them.

The hope is that the information in this report can help inform both the design of new digital services and the national conversation about where and how to target interventions aimed at narrowing the digital divide—and bring all Kenyans at all income levels along on the country’s journey toward digital transformation.

The “people-centered” perspective is freely available and can be downloaded here.

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    https://www.bsg.ox.ac.uk/research/publications/m-pesa-success-story-digital-financial-inclusion

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